When you are marketing medical device sales or services to the healthcare market, every dollar has to count for maximum ROI. But where should these advertising and marketing spends be invested in? Unfortunately, many medical device vendors rely on erroneous assumptions and unreliable historical data to inform their device marketing budget for the upcoming year or quarter.
Assumption #1: Revenue will be stable from one year to the next. It’s easy to believe that the old marketing techniques and strategies you’ve used to secure clients last year will continue to be effective moving forward. While you can rely on traditional methods to provide a projected baseline, you must always be investing in some improvement or replacement. You must always be refining your advertising campaigns and filling in the gaps in your marketing outreach to tap into new markets and demographics.
Assumption #2: Demand will remain stable (medical device users provide a renewable client base). For an industry where new and better medical devices are being patented and marketed all the time, you can’t rely on past sales to project future ones. You must continue to work to generate repeat and new business.
Assumption #3: More spend always equals more return. Trying to just throw more money at your medical device ad budget is just going to get you burning through that budget faster than you anticipate — with little-to-nothing to show for it. A truly optimal budget relies on high-ROI marketing and advertising activities and knows when to scale back or totally disinvest from outreach efforts that aren’t proving worthwhile.
In the marketing and advertising of medical devices, the adage “you must spend money to make money” is an absolute truth. Now, the question comes down to how much money must you spend and where’s the best place to put it for the highest return?
Here are two main strategies you can apply to your medical device ad budget as starting points:
You can establish a reasonable budget by grounding it on concrete goals you’re aiming for with your medical device sales. This means you have to ask yourself a number of defining questions.
- How many sales is the required minimum? In what timeframe?
- How many leads does it take, on average, to get one sale?
- How much money do you have to spend to get one lead (cost per lead)
Then, take the total number of leads you need to reach your required sales in your target timeframe, and multiply that by the average cost per lead to determine your required marketing budget for a particular campaign. (But don’t forget to also add in some general marketing budget on top of this for overall brand awareness growth and other initiatives.)
These questions and connected budget points will change over time, of course but can provide ongoing guidance for budgetary benchmarks as you establish your medical device advertising campaigns and outreach.
Revenue-percentage budgeting is an alternative to goal-based budgeting. This approach asks how much of your overall revenue is an appropriate amount for a company of your particular size and age. This may vary, depending on your specific devices and clientele, and usually requires a degree of flexibility as the percentages can fluctuate from quarter to quarter. A smaller or newer company should probably invest a full 10% of their revenue into their marketing budget, while larger companies with established customer bases can invest less. It requires close data tracking and the ability to experiment, but also allows for nimble responses to industry shifts in demand.
(Of course, you can also rely on sheer guesswork and luck...but we’re not going to waste space on that approach, since we know how that ends up 99.9% of the time.)
Want to learn more about these medical device advertising and marketing budget approaches? Download our Free Guide: Medical Device Marketing.